The Labour Party is opening the door to policy change, including taking GST off food and clamping down on foreigners buying farms.

Phil Goff is trying to go to the left of Helen Clark. Taking GST off food is a daft idea. Mind you McDonalds will think it is a great policy.

And it is vital we must stop farmers from being able to sell their farms. Imagine if a foreigner buys a farm. One minute it is sitting there in the Waikato, and suddenly the foreigner has packed the farm up and moved it overseas. The dirt, the grass, the cows, the sheds – all gone. Just a big chasm left in the earth.

I wonder if Winston will sue Phil for stealing his policies? I mean they already share major funders, so sharing policies is next logical step. Maybe their shared name can be Labour First.

Related posts:

This entry was posted on Thursday, May 6th, 2010 at 9:10 am and is filed under NZ Politics.
You can follow any responses to this entry through the RSS 2.0 feed.
Both comments and pings are currently closed.

One possibly unintended consequence of removing GST off food, is that you can’t register for GST if you do not produce a GST product or service. If there is no GST on food, then McDonalds cannot claim back the GST they pay on their non-food supplies, and therefore they will either have absorb the cost, or leave their prices the same as they are currently – so effectively there will be no change in the retail price.

McDonalds don’t sell food. They market an experience. I’ve been party to a meeting at which some fairly heavy weight people from that organisation discussed the concept. The fact that you can eat what they sell you is really not very important to them.

Likely that value added services will have GST added, such as restaurants. However it will become a grey area as what is value added and what is not. For instance will sliced bread be GST exempt or not. What about supermarket cooked chickens. Anyway the compliance costs for GST will skyrocket.

While there is a perceived benefit at the cash register because the customer can see on the receipt that there is no gst on the food, the customer does not see the hidden costs. The hidden cost is the food price increases to cover increased compliance costs.

If the customers receipt broke line items into profit/fixed/variable costs / tax then it would be clearer. A new cost is added to each line item, that is, ‘variable gst compliance cost’.

Interesting-ish that he’d raise the top tax threhold to $100k – way up on what Labour was doing before, and only getting 3% of taxpayers (wonder if he’s a bracket-creep kinda guy). Takes a bit of the hurt off raising the top rate back to 38…

Yes, wreck1080 is on to it re visible vs hidden costs. Add to that the funding required for the Department of Food Tax Compliance, the Food Tax Treaty Settlement Commission and Food Tax Disputes Tribunal. Perhap Labour could put Parakura Horomia in charge of the latter.

I think the perceived issue with selling to foriegners farms is currently we give farmers preferential treatment in terms of waste (run off into waterways) and other issues they lobby for due to them being a economic neccessity to our economy. By selling to foreigners they would effectively be getting preferential treatment but not giving the benefit we mainly derive, i.e. our balance of payments being not more terrible than it is.

Goff will try to find a way that means GST is still payable on McDonalds, but not Subway. Let’s say he does it by defining the maximum percentage fat of a meal.

Two things will happen. One, McDonalds will lawyer up and spend millions to redefine the meaning of fat, or natural products, etc. They will not do this because they are evil, comrades, but because Phil Goff has just made it highly profitable for them to do so.

Second, McDonalds will make minor adjustments to their menu. A little more bread, a little less mayo, etc, to sneak under the bar. Yay, GST-free Big Macs.

The other thing that will happen is Subway will lobby furiously for McDonalds not to be exempted. They will lawyer up and oppose everything McDonalds does.

Another thing will happen. Muffin makers (say) will be unintentionally caught because an unanticipated effect of Goff’s definition catches their product. So they lawyer up and lobby government for exemption for products containing blueberry, white chocolate and pecan.

Furthermore, makers of edible undies and lollipops, who are close to the exemption but didn’t quite make, also hire a team of lawyers for an expansion to the exemption. They will also employ teams of scientists to figure out ways to get lollipops into the definition required for an exemption without sacrificing lollipop flavour.

In all, you have teams of highly trained and talented people arguing what sugar really means and whether an extra few blueberries qualify for exemption or not. This is known as dead weight loss.

Naturally, National will think this is a great idea and will pick up Phil Goff’s brilliant plan. It’s not even his area but I can see Steven Joyce standing in front of cameras explaining the goodness of GST exemptions.

To be fair, I think McDonalds also thought it was great that they got subsidised for hiring staff off the long term unemployed list.
We seem to bumble from one kakistocracy to another, it’s a very shallow pool of talent to elect from, can’t we ECAN all the politicians and replace them with a commissioner?

Mr Goff is onto a couple of winners here. Think about how many more Public Servants will be needed to administer the moras that Gst compliance will become. Quaint in a funny sort of way, expanded P S administering a diminishing gst tax take and they will all be labour supporters.
Then the official amalgamation of winston first and labour last to form an entity that will be deadbeat, with winnie and phill as co joint leaders and One P. Ure as a foundation supporter, that will indeed be winner number two.

‘One, because the GST hike is imminent. Two, because there is a lot of talk about the desirability of pursuing a single Australasian market, and Australia operates their allegedly complex food exemption so smoothly and cost effectively that compliance is no longer a contentious issue over there. Three, because in December, the Australian Tax Office unveiled a computerized model that makes GST food and beverage compliance extremely easy to manage, and four, because a major New Zealand research study released in March has proven that if supermarket customers were given a 12.5 % price discount, an almost dollar for dollar higher investment in healthy food will result, and will be still observable six months later. Cutting GST on food in other words, would will result in lasting health benefits.’

As ben has explained very well earlier, adding exemptions here and there for GST would be a fuck-up of mammoth proportions.

All it would create would be nonsensical and bizarre inconsistencies, loopholes, and mountains of admin costs.
It would send millions of dollars straight into the hands of lawyers and accountants, while doing no other good whatsoever.

Still problems though:
– determining the rulings can be a major resource hog
– businesses should be focused on selling goods and/or services, not on how to beat the system
– many small businesses simply divide totals by 9 to calculate the GST component, with variable rates this isn’t possible

Your shitting me right? You really believe that anyone would happily pay what the could get out of? Fuck I dont agree with WFF, but if I’m entitled I’ll still claim it as it will make me and my family better off.

Businesses don’t pay GST.

What makes you think that food prices will go down? I doubt very much that any food provider will drop their prices by the whole 12.5%! If they can get away with it, then it will be more like a token 5% drop.

Anyone selling any volume these days would have software or an intelligent cash register.

Yes, cause all the corner dairys Ive been too recently have brand spanking new cash registers, and the shiniest PC out back with the latest tax software on it….

Xenophobia for the win. Hell, they get two constituencies with this policy. They get the xenophobes and they get the paranoid ones who think that foreigners will rape the land and its natural resources for maximum short-term profit extraction then get the fuck out. This could be a somewhat legitimate concern as foreigners typically won’t have the same attachment to land and country that someone who resides here does and they may have different cultural values and ways of doing business, but then, someone who resides here is not guaranteed not to operate in a similar manner or have values and/or ways of doing business that are not different to the norm.

Removing GST on food sounds like a nice policy until you realise there are better ways to change the desired distribution of resources than making a tax system increasingly complex. The implication of such a removal is concerning as it suggests that Labour are deciding what is good and necessary for society. Food would be universally accepted – although which types may be contentious, but if Labour is willing to make an exemption here, what is to say it won’t lead to lobbying for further exemptions on “necessary” goods and services? It’s a dangerous move to make.

Firstly they protest the hike in GST to 15% from 12.5% with an Ax the Tax campaign (which would also suggest they would get rid of GST altogether by the way) under the guise of protesting the 2.5% increase.

Secondly with such a campaign (that had been rolled out) you would expect them to set a policy to drop it back down to 12.5% when they get in, but no! They instead come up with excuses (same excuses as Bill English gave for the increase to 15%)

Thirdly they now want to cut it off food which despite its noble intentions will make it even more grey and murky…

Instead if they had any real substance they would have followed a consistent line i.e. do your campaign (ax the tax) on something that is realistic (i.e. commit to your alternative to the perceived problem for their constituency base and tailor a campaign that is consistent and congruent with that) and not muddle around and come up with this…

I was working on the premise promoted by most in here. It’s called competition.

If there was true compitition, we would be paying a hell of a lot less for our food products.

And yes, most corner dairies do already have cash registers capable of handling GST and Non-GST items.

Where? Remuera? Go to a dairy in BeachHaven or Birkenhead and ask them if their POS equipment will handle it.

Not everyone has the resources of a MacDonalds or Woolworths who can invest in the latest equipment if they choose.

Your mistake is that you are solely looking at the tax collection from the POS. Think about the regulatory requirements for implementing this, what food will be exempt? I can absolutely guarentee you that the NZ public will not support the likes Macca’s and KFC being able to sell their goods without GST, therefore the GST would be removed from only healthy food. How do you define healthy food? How does that get enforced? How do we regulate the sale of Healthier food GST free, while collecting GST off unhealthy options?

Will we end up spending more on a regulatory body to define and enforce the rules, than would be saved by the tax payer from the GST on food.

Redeye – Of course businesses pay GST. They deduct the GST they have paid to their suppliers from the GST they have collected from their customers and pay the IRD the rest. Sometimes this may be a refund but that means they are losing money and so probably won’t be in business for long.

Redeye – I guess you’re arguing that GST is purely a cost to the business that they pass on to their customer but, as a business owner, I know what would happen if I declined to collect this tax on behalf of the government and them pay it to the IRD

Bevan my mistake is that I’m debating with an idiot like you. Australia has GST exemptions for FRESH food. As I already said. Maccas and KFC still pay their wack.

Defining fresh food has it’s challenges but they manage over the ditch without too many drawn out legal challenges.

You must have missed the questions:

How do you define healthy food?
How does that get enforced?
How do we regulate the sale of Healthier food GST free, while collecting GST off unhealthy options?

All this requires money to set up. Money that will come from tax. Whatever collective amount saved by consumers in reduced cost on food (and I doubt that food will drop by the appropriate amount!) will be eclisped by the cost of setting up the regulatry monstrosity that would be needed.

And it is vital we must stop farmers from being able to sell their farms. Imagine if a foreigner buys a farm. One minute it is sitting there in the Waikato, and suddenly the foreigner has packed the farm up and moved it overseas. The dirt, the grass, the cows, the sheds – all gone. Just a big chasm left in the earth.

Oh very droll. So you considered it just peachy when Tommy Suharto bought up a huge chuck of the South Island via investment in a sheep station, then? It’s a bit like that other rort NZ First exposed (back in the day when it stood for something), the “investment” by “business migrants” in palatial Auckland homes. Aside from the developers, no NZer profited one iota from this “investment”… we were simply being conned for permanent residency status and, eventually, citizenship, by people who didn’t even bother to reside here.

I’m not suggesting we don’t sell our land (or our forests, or our fisheries etc) to overseas owners, just that we do so intelligently, with an eye to what’s best for New Zealand and New Zealanders. We haven’t done so up till now, and we’re paying the price for that.

You can’t register for GST if you do not produce a GST product.
Can McDonalds [or any other food outlet] therefore claim GST on non food components like packaging?
Will GST be removed from only ‘essential’ foods?
Or fresh foods, and what constitutes fresh?
What vitamins and other pharmaceutical items are food?
and Edible undies!

I think you’ll find that NZ’s entire political spectrum has slid inexorably to the left, with ACT today being further to the left of Labour in the 80’s. We are now firmly in the grip of an entitlement epidemic, the corrective (or even arresting) medicine being avoided by successive governments who have proven themselves more concerned about their own political bauble’s than the future of NZ.

There are one or two European countries that have following the same socialist path. Greece (pop -3) springs to mind.

I think Labour should change thier tactics. Instead of dumping on everything the Nats do, they should be saying they would have done the same. There is very little difference in what the Nats are currently doing and what Labour previously did.

I don’t see the problem here. Anything Labour does now, that is ridiculed by National will be eventually be picked up by National in the long term. The worst thing is that many of you will agree with it despite laughing at it now.

What with the Environment Trading Bill adding more stress to society pushing the cost of living up, society needs a vent and taking GST of food would be a brilliant start.

I am quite seeing the narrow side of David Farrar, with his attitude to agreeing with the concerted attacks against all levels of education and his awful approval of a 10 y o boy shot point blank in the head. Even though it was only a film. Still a shocking indictmenet of a public figure. (who doesn’t have to worry about votes)

Mr Farrar is obviously in favour of marginalising a bigger portion of society and and cutting out more of the middle class.

His views on de population would also be predictable.

But at least we have an idea of how his colleagues in parliament think.

He is certainly a beacon of what we can expect in the future that the pollies themselves would never utter publicly.